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Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field

Author

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  • Norwood Bailey

    (Oklahoma State University)

  • Lusk Jayson L

    (Oklahoma State University)

Abstract

Eliciting actual donations toward a public good has been proposed as a means of estimating a lower bound to individuals' compensating surplus, and can be accomplished using mail/phone surveys or field experiments. This study shows that when warm-glow is present, the elicitation instrument decreases the transaction costs of donating. This presents an obstacle to using the donation mechanism. As a remedy, we propose the use of a multi-donation mechanism where subjects can direct their donation to alternative public goods. Results from a field experiment confirm this instrument-induced bias can be large, suggesting field experiment practitioners should seriously consider how their experimental procedures may alter economic behavior.

Suggested Citation

  • Norwood Bailey & Lusk Jayson L, 2005. "Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-26, December.
    • Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:2:n:3
    DOI: 10.2202/1538-0645.1413
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    Cited by:

    1. List John A., 2007. "Field Experiments: A Bridge between Lab and Naturally Occurring Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(2), pages 1-47, April.

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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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